VERU (2022 - Q1)

Good morning, ladies and gentlemen, and welcome to Veru Inc. Investor Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After this morning’s discussion, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd now like to turn the conference over to Mr. Sam Fisch, Veru Inc's Executive Director, Investor Relations and Corporate Communications. Mr. Fisch, please go ahead. Samuel F

Good morning. The statements made on this conference call may be forward-looking statements. Forward-looking statements may include but are not necessarily limited to, statements of the Company's plans, objectives, expectations or intentions regarding its business, operations, finances and development and product portfolio. Such forward-looking statements are subject to known and unknown risks and uncertainties and our actual results may differ significantly from those projected, suggested or included in any forward-looking statements. Risks that may cause actual results or developments to differ materially are contained in our 10-Q and 10-K SEC filings, as well as in our press releases from time to time. I'd now like to turn the conference call over to Dr. Mitchell Steiner, Veru Inc's, Chairman, CEO and President.

Good morning. With me on this morning's call are Michele Greco, CFO, CAO; Michael Purvis, Executive Vice President, General Counsel and Corporate Strategy; and Sam Fisch, Executive Director of Investor Relations and Corporate Communications. Thank you for joining our call. Veru is dedicated to the development of novel medicines for the management of two of the most prevalent cancers, breast cancer and prostate cancer. One of our anti-cancer drugs sabizabulin has dual antiviral and anti-inflammatory effects. So it is also being developed for the potential treatment of hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome, which remains a global dire unmet medical need. The company has a commercial sexual health division called UREV, which includes two FDA-approved products, ENTADFI, a new treatment for BPH, which is Benign Prostatic Hyperplasia and the FC2 female condom, internal condom for the dual protection against unplanned pregnancy and the transmission of sexually transmitted infections. The revenue from the sexual health division is being used to largely fund the clinical development of our late-stage drug candidate assets, which aim to address multibillion dollar premium market opportunities. This morning, we will discuss Veru's business strategy, the clinical development of our drug pipeline and the commercialization of our products. We will also provide financial highlights for our first quarter fiscal year 2022. COVID-19 global cases, hospitalizations and deaths are at the highest level since the start of the pandemic. Some of the antibody drugs are not effective against the Omicron variant. It is clear that an effective and safe oral therapeutic that prevents deaths in hospitalized patients with moderate to severe COVID-19 infection who are at high risk for acute respiratory distress syndrome is desperately needed. We strongly believe that sabizabulin with its antiviral and anti-inflammatory properties and a favorable safety profile can be that greatly needed oral therapy for hospitalized patients with COVID-19. Sabizabulin disrupts the intracellular transport of the coronaviruses by microtubules. This is a process that's required by all variants of COVID-19, including Omicron to cause infection. While there have been recent developments evaluating the Merck drug, molnupiravir and the Pfizer drug, paxlovid for the treatment of unhospitalized patients with mild to moderate COVID-19 who are at relatively low risk of dying. Sabizabulin in contrast is being developed for hospitalized patients with moderate to severe COVID-19, who are at high risk of death. Our positive Phase II clinical study in hospitalized COVID-19 patients at high risk for acute respiratory distress syndrome show that sabizabulin treatment being resulted in an 82% relative reduction in deaths compared to placebo. If our Phase II clinical results replicated to any significant degree in our global Phase III clinical study, we believe sabizabulin would fill in as a significant unmet medical need for hospitalized patients. We are conducting a Phase III COVID-19 clinical study, which is a double-blind multicenter, multinational randomized 2:1 placebo-controlled study, evaluating daily oral 9 milligram dose of sabizabulin for up to 21 days versus placebo and 300 hospitalized COVID-19 patients with high risk for acute respiratory distress syndrome. The primary efficacy endpoint will be the proportion of patients who die on study up to day 60. Secondary endpoints will include the proportion of patients without respiratory failure, days in the ICU, WHO ordinal scale for Clinical Improvement change from baseline, days on mechanical ventilation, days in the hospital and viral load. The study is being conducted in the U.S., Brazil, Argentina, Mexico, Colombia and Bulgaria. In January of 2022, the FDA granted Fast Track designation with a Phase III COVID-19 registration program, a distinction that underscores the urgent need for new, novel and effective therapies to be used along with vaccinations to combat this COVID-19 pandemic. The company has sufficient clinical drug supply on hand to complete the Phase III clinical study and to help fund the commercial drug to supply the needs of the U.S. population assuming confirmatory positive clinical results and FDA approval, we are seeking funding from BARDA and other agencies. The company anticipates having the results for the Phase III COVID-19 clinical trial in the first half of calendar year 2022. As for our breast cancer drug portfolio, we have an expansive metastatic breast cancer program, with two of our drug candidates, Enobosarm and Sabizabulin. Enobosarm is an oral selective androgen receptor targeting agonist which has shown efficacy in Phase II clinical studies in a heavily pre-treated hormone receptor positive metastatic breast cancer patient population, with an excellent safety profile, without causing unwanted masculinizing adverse side effects. Enobosarm represents the first and novel endocrine therapeutic approach to breast cancer in decades. Our second drug candidate sabizabulin is an Oral Cytoskeleton Disruptor that targets unique binding sites and crosslinks microtubules, a well-validated cancer target resulting in promising efficacy and a favorable safety profile without clinically relevant neurotoxicity, neutropenia or alopecia. Furthermore, chronic oral daily administration of sabizabulin is feasible. Our clinical development strategy allows us to potentially become an important treatment option for a variety of large market opportunities in hormone receptor positive metastatic breast cancer. In the third line treatment setting for hormone receptor positive metastatic breast cancer, we have two clinical programs based on the patient's androgen receptor nuclei staining or expression levels in the breast cancer tissue. The patients with greater than or equal to 40% androgen receptor expression, we are actively enrolling a global Phase III ARTEST registration clinical study to evaluate enobosarm monotherapy with a third-line treatment of AR+, ER+, HER2- metastatic breast cancer. Enobosarm targets the androgen receptor, which has tumor suppressor activity in AR+, ER+, HER2- metastatic breast cancer without causing the unwanted masculinizing side effects. Enobosarm has extensive non-clinical and clinical experience having been in evaluating 25 separate clinical studies in approximately 1,450 patients dose, including three Phase II clinical studies in advanced breast cancer involving more than 250 patients. This means, we have a very good understanding of the favorable safety profile with enobosarm. As for efficacy, there were two Phase II clinical studies conducted in women with AR+, ER+, HER2- metastatic breast cancer where enobosarm demonstrated significant antitumor efficacy in a heavily pretreated cohorts that develop tumor progression after receiving estrogen-blocking agents, chemotherapy and/or a CDK4/6 inhibitor. And again, in this population, enobosarm was well tolerated with a favorable safety profile. We are conducting a Phase III multicenter international open label, randomized 1:1 ARTEST registration clinical trial to evaluate the efficacy and safety of enobosarm monotherapy versus an active comparative either exemestane plus or minus everolimus or a selective androgen receptor modulator for the treatment of AR+, ER+, HER2- metastatic breast cancer in approximately 210 patients with greater than or equal to AR expression in a breast cancer tissue who have previously received a nonsteroidal aromatase inhibitor, fulvestrant and a CDK4/6 inhibitor. In January of 2022, FDA granted Fast Track designation to our Phase III ARTEST registration program. Fast Track designation aims to expedite the development and review of new drugs that are intended to treat serious or life-threatening conditions and demonstrate the potential to fill unmet medical needs. Filling an unmet medical need is defined as providing a therapy where none exists or providing a therapy which maybe potentially better than available therapy. Patients who have found to have less than 40% AR expression in their breast cancer tissue, we have a planned sister study, which is an open-label, multicenter, randomized 1:1 Phase IIb study evaluating the efficacy and safety sabizabulin 32 milligrams monotherapy versus the active comparative either exemestane +/- everolimus or SERM, for the treatment of ER+, AR+ metastatic breast cancer in approximately 200 patients who have previously received a non-steroidal aromatase inhibitor fulvestrant and a CDK4/6 inhibitor. For clarity, this means we have a sister study to randomized patients that did not qualify for the Phase III ARTEST study because their AR expression and the breast cancer tissue was too low. We received the safe to proceed letter from FDA and this Phase IIb study is expected to commence in calendar of Q1 2022. We are also moving enobosarm therapy earlier in the treatment sequence into the second line treatment settings AR+, ER+, HER2- metastatic breast cancer by targeting patients with AR+ breast cancer expression greater than equal to 40% in the Phase III ENABLAR-2 clinical study. CDK4/6 inhibitor and estrogen-blocking agent combination has become the first line therapy for patients with ER+, HER2- advanced breast cancer. Unfortunately, almost all patients will develop drug resistance and will eventually develop breast cancer progression. Based on the positive Phase II clinical data and the preclinical data supporting the use of enobosarm in combination with the CDK4/6 inhibitor in patients who are CDK4/6 inhibitor, an estrogen-blocking agent resistant, we plan to conduct a Phase III multicenter, open-label, randomized 1:1 active control registration clinical study named ENABLAR-2, evaluate the efficacy and safety for enobosarm and abemaciclib combination therapy versus an alternative estrogen-blocking agent in subjects with AR+, ER+, HER2- metastatic breast cancer who have failed first line therapy with palbociclib, which is a CDK4/6 inhibitor, plus an estrogen-blocking agent and have greater than equal to 40% AR expression in their breast cancer tissue. We plan to enroll approximately 186 patients in this Phase III clinical study. We recently announced that we have entered into a Clinical Trial Collaboration and Supply Agreement with Lilly with the ENABLAR-2 Phase III clinical study. Under the terms of the non-exclusive clinical trial collaboration and supply agreement, Veru is responsible for conducting the clinical trial while Lilly will supply abemaciclib for the study. Veru maintains full exclusive, global rights to enobosarm. We are looking forward to our collaboration with Lilly on the ENABLAR-2 Phase III clinical trial, which is expected to commence in calendar Q1 2022. We are partnered with Roche Ventana, a major global diagnostics company to develop a companion diagnostic androgen receptor test. In the Phase II 801 study, we have determined that the presence and the amount of the androgen receptor expression in breast cancer tissue are important for enobosarm's targeted anti-tumor activity. In fact, we identified that patients who have greater than equal to 40% androgen receptor staining by immunohistochemistry, which is a measure of androgen receptor expression in their breast cancer tissue are the patients that are most likely to have an anti-cancer response to enobosarm. Based on this observation, the FDA recommended that we develop a companion diagnostic test to determine the patient's AR expression status. Consequently, we have partnered with Roche Ventana Diagnostics, a world leader in oncology companion diagnostic tests, we’re developing and if approved plans to commercialize the companion diagnostic androgen receptor test. The companion diagnostic test is being developed in parallel with the Phase III ARTEST clinical study. Although the company has been planning to commence a single arm, sabizabulin plus enobosarm combination for metastatic triple negative breast cancer patients in a Phase II clinical study that was suppose to start early in this calendar year, we have now decided to focus on finite resources on more advanced pipeline opportunities and suspend work on this trial. Nevertheless, the company remains committed to advancing triple negative breast cancer study in the future. As you can see, we have developed an important and deep breast cancer programs dedicated to developing [Technical Difficulty]. We have late clinical stage studies addressing three separate indications. The first indication is evaluating sabizabulin for the third-line treatment of metastatic castration-resistant prostate cancer in the Phase III Veracity study. Several novel androgen receptor targeting [Technical Difficulty] enzalutamide and apalutamide. Unfortunately, most men with metastatic castration-resistant prostate cancer will develop tumor progression while receiving an androgen receptor targeted agent with 60% to 70% of patients progressing by 12 to 18 months and 30% to 40% of men having no benefit at all. New effective and well tolerated treatment alternatives that do not target the androgen receptor access and that have an easy mode of administration are greatly needed. Sabizabulin is a member of a novel class of drugs that disrupts the cytoskeleton by targeting unique binding sites of microtubules, which results in improved safety profile. In preclinical models, there was no evidence of significant liver toxicity, neurotoxicity and neutropenia with sabizabulin treatment. This more tolerable safety profile was also been confirmed in a first-in-man Phase Ib/II study in metastatic castration-resistant prostate cancer patients. We will be presenting updated clinical data from the positive Phase Ib/II study of sabizabulin in 80 men with metastatic castration-resistant prostate cancer who have progressed on at least one novel androgen receptor targeting agent at the ASCO Genitourinary Cancers Symposium being held February 17th and 19th in San Francisco, California. [Indiscernible] is conducting an open-label 2:1 multicenter Phase III Veracity clinical study evaluating sabizabulin 32 milligrams versus an alternative androgen receptor targeted agent for the treatment of chemotherapy naive men with metastatic castration-resistant prostate cancer who had tumor progression after previously receiving at least one androgen receptor targeted agent. The primary endpoint is radiographic progression-free survival, enrollment for the Phase III Veracity clinical study is on track, and we expect to enroll approximately 245 patients from 45 clinical centers in the U.S. A second clinical study is evaluating VERU-100, a GnRH Antagonist 3-Month Depot formulation in a Phase II dose finding clinical study for the treatment of Hormone Sensitive Advanced Prostate Cancer. Androgen Deprivation Therapy remains the mainstay primary therapy for advanced prostate cancer, but current androgen deprivation therapy drug products have several important clinical shortfalls. LHRH agonists initial administration leads to a testosterone surge that lasts up to 21 days. FIRMAGON, a GnRH antagonist is a large volume subcutaneous injection formulation designed for only a single month release. Relugolix is an oral GnRH antagonist and has the potential for poor patient compliance. In contrast, VERU-100 has a target product profile that addresses a number of these important clinical shortfalls of the currently commercially available androgen deprivation therapy products. VERU-100 is a long-acting GnRH antagonist, designed to be administered as a small volume, subcutaneous three-month depot injection. VERU-100 drug products are expected to immediately suppress testosterone with no testosterone surge and VERU-100 is a long-acting injected depot would ensure patient compliance while on treatment. Furthermore, as a class, GnRH antagonist have been shown to have fewer cardiovascular adverse events than LHRH agonist. We are conducting a Phase II dose-finding clinical study of VERU-100 androgen deprivation therapy in 35 men with hormone-sensitive advanced prostate cancer. Although the study is ongoing, the preliminary clinical data are promising. The Phase III registration clinical study design is already been agreed upon with FDA. It will be a single-arm study which will enroll approximately 100 men, maintenance of castrate blood concentration of testosterone is the primary endpoint. After the Phase II dose-finding study is completed, we will initiate the Phase III clinical study which is anticipated to begin in calendar second half of 2022. In our third late-stage clinical study, we plan to advance Zuclomiphene for the treatment of hot flashes caused by androgen deprivation therapy in a planned Phase IIb clinical study later in the calendar year of 2022. So in summary, we will have three late-stage clinical studies for the management of advanced prostate cancer in calendar year 2022. Now Veru has a commercial sexual health division called UREV, which includes two FDA approved products, FC2 for the dual protection against [Technical Difficulty] across the U.S. As a result, FC2 is now available through multiple sales channels. In particular, we have partnered with fast growing, highly reputable telemedicine platform companies to bring our FC2 product to patients in a cost effective and highly convenient manner. [Technical Difficulty] sales is not only to seek additional telemedicine and Internet pharmacy service partners, but also to create our own [Technical Difficulty] has been shown to be more effective for the treatment of benign prostatic hyperplasia and finasteride alone without causing impotence. ENTADFI was approved by FDA in December of 2021, and commercialization plans are now underway. The plan is to officially launch ENTADFI next quarter. ENTADFI is expected to be market and distributed also by our own direct to patient telemedicine and Internet pharmacy services platform. We have also partnered with GoodRx, a U.S.-based digital resource for healthcare, to reach their almost 20 million monthly visitors, which include both consumer and healthcare providers to build awareness to send patients to our telemedicine platform and to convert existing men on BPH treatments, those treatments that cause sexual side effects to ENTADFI. There are over 45 million prescriptions filled annually for drugs to treat BPH. We plan to augment our marketing and sales effort by seeking digital partners in the U.S. and ex-U.S. I will now turn the call over to Michele Greco, the CFO and CAO to discuss the financial highlights. Michele?

Thank you, Dr. Steiner. As Dr. Steiner indicated, the company has a number of significant clinical development process. Let's review the first quarter results. Net revenues were $14.1 million compared to $14.6 million in the prior year quarter. The prior year quarter included net revenues of $863,000 related to PREBOOST, which the company sold on December 8, 2020. The company reported FC2 sales growth in its U.S. prescription business with net revenues up 27% to $11.6 million from $9.1 million in the prior year quarter. Net revenues for the public sector business were $2.6 million compared to $4.7 million in the prior year quarter. The prior year quarter included revenues related to the Brazil and South African tenders. Overall gross profit was $11.8 million or 84% of net revenues compared to $10.8 million or 74% of net revenues in the prior year quarter. The increase in gross profit and gross margin is driven primarily by increased sales in our U.S. FC2 prescription business. This quarters 84% gross margin is the highest in the company's history. Operating expenses for the quarter increased to $16.8 million compared to the prior year quarter of $10.1 million. The increase is primarily driven by research and development costs, which increased to $10.1 million from $5.7 million in the prior year quarter and increases in personnel and related costs to prepare to commercialize ENTADFI. During the prior year quarter, the company sold PREBOOST for $20 million, $15 million in cash and $5 million in notes receivable due in two installments over an 18-month period. The sale of PREBOOST resulted in an $18.4 million pre-tax gain. The operating loss for the quarter was $5 million compared to operating income of $19.2 million in the prior year quarter. This change is primarily due to the gain on sale of PREBOOST of $18.4 million plus the increase in research and development cost of $4.4 million. Non-operating expenses were $1.3 million compared to $1.9 million in the prior year quarter and primarily consisted of interest expense and change in the fair value of the derivative liabilities related to the synthetic royalty financing. We entered the synthetic royalty financing during March of 2018. For the quarter, we recorded a tax expense of $115,000 compared to $78,000 in the prior year quarter. The bottom line results for the quarter was a net loss of $6.4 million or $0.08 per diluted common share compared to net income of $17.2 million or $0.23 per diluted common share in the prior year quarter. The company has net operating loss carryforwards for U.S. federal tax purposes of $38.6 million, with $29.5 million expiring in years through 2040 and $9.1 million, which can be carried forward indefinitely. And our U.K. subsidiary has net operating loss carryforwards of $63.5 million, which do not expire. Now looking at the balance sheet. As of December 31, 2021, our cash balance was $116.1 million. Our accounts receivable balance was $8.1 million and our notes receivable related to sale of PREBOOST were $2.5 million. Our net working capital was $131.8 million at December 31, 2020 compared to $136 million at September 30, 2021. Overall, we are delighted to see the growth in the U.S. FC2 prescription business, and look forward to increasing sales in the global public sector business. This revenue source together with our strong balance sheet continues to be the source of funds we use to invest in our promising pharmaceutical clinical development programs as we continue to transform our company into a premium oncology biopharmaceutical company seeking large market opportunities in breast and prostate cancers as well as being opportunistic by joining the global efforts to find effective treatments for COVID-19. Now I'd like to turn the call back to Dr. Steiner.

Thank you, Michele. In summary, we've had a highly productive financial first quarter, which has allowed us to significantly advance our clinical oncology programs. We've organized our FDA approved products into a sexual health division called UREV. We are now entering our sixth year of growth in our FC2 U.S. prescription business. We are executing on a solid plan to expand partnerships and to launch our own direct to patient telemedicine and Internet pharmacy services portal. We plan to commercially launch ENTADFI also be our own direct to patient telemedicine in international services portal. And we have partnered with GoodRx to drive awareness and prescription conversion. Both programs should allow us to continue the robust growth of revenue from the UREV sexual health division. Having these resources in place will allow us to continue to advance our deep late clinical stage breast cancer and prostate cancer programs, as well as a Phase III COVID-19 clinical study. We are quite pleased to have recently received Fast Track designation from FDA on two of the company's major drug development programs this past month. We anticipate a steady flow of important positive news for Veru over the next few months to one year. We are committed to driving shareholder value by developing commercializing novel medicines, addressing significant unmet medical needs for the management of breast cancer and prostate cancer and being opportunistic by developing sabizabulin for hospitalized COVID-19 patients and high-risk for acute respiratory distress syndrome and death. With that, I'll now open the call to questions. Operator?

Thank you. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. [Operator Instructions] The first question today comes from Brandon Folkes with Cantor Fitzgerald. Please go ahead.

Hi, thanks for taking my questions and congratulations on all the progress. Maybe just first on the COVID program, just given that to the near-term catalyst. How do you view the bar having shifted or not on the COVID endpoint, especially around mortality? And then along those lines, do you think that the secondary endpoints alone could support an approval here?

So just say the first part about mortality, again. So what about the primary endpoint?

Do you think that agencies have shifted their view on endpoints right versus so if you don't, if not successful on mortality? Do you think these secondary endpoints alone could still support an approval from the regulatory agencies?

Yes. Got you. So the answer is I don't think they're switching at all on the primary endpoint. I think that if you've seen some recent activity in some people reporting results and the reporting results now on their primary endpoint. So at the beginning of any clinical trial, you state your primary endpoint. I'm not saying this to you, but I'm just saying this for the people listening on the phone. You have to hit your primary endpoint. I mean, that's what - that defines success in the trial. And mortality, deaths, I mean, that's about the hardest endpoint, you can't fake a death and deaths is what we're trying to deal with in something as horrible as the pandemic. With that said, no, I do not think agencies are shifting on their desire to see an impact in mortality. And so I think we're good there. However having said that, let me just make one more comment. The other comment is well, let me make this next comment. Don't make the one I was about to make. So to answer your question, there are key secondary endpoints that if you miss mortality and you hit these other ones, there could be a discussion with FDA that these can stand on their own. But that's discussion with FDA. Now, one thing that gives us comfort is as you know, the space has gotten full crowded in pre-hospitalized patients. So patients that are not in the hospital, it's no longer than unmet medical needs. You got the Pfizer drug, Merck drug and others. And so in that setting, there are options. And in the hospitalized setting, what we're learning now the drug, in fact, the FDA has even said with the Omicron variant, that some of these drugs antibody – antibody drugs that are currently out there for people in hospitalized setting should not be used. And so the fact that we got Fast Track designation by FDA for hospitalized patients means it’s still unmet medical need. So in the advance that you have an unmet medical need and you have a secondary endpoint that's successful and you don't hit on mortality, that's a little different than there are other options out there. So in that setting, I think we have a lot of room to talk to FDA with the key secondary endpoints, if that's what you hit it in a setting of an unmet medical need. And again, the unmet medical need is not what we're saying. It's the fact that we just got FDA Fast Track designation means that they also because remember they see drugs in development and they see drugs that are approved. And so that that gives us some comfort and we continue to work in a very important area of unmet medical need.

Great. Thank you very much.

Thank you.

The next question comes from Leland Gershell with Oppenheimer. Please go ahead.

Hey, good morning. Thank you for taking my questions. I want to ask Mitch with respect to your developments in breast cancer being that the androgen receptor now appears to be a tumor suppressor in breast cancer. Want to know, as you divide between those with their expression above 40% and below 40%. How that breaks down with respect to the size of the fractions of the population with breast cancer with those levels of AR expression? Would that thinking be correct that more advanced ER+ HER2- breast cancer would be more enriched in the AR, given that those tumors are likely more resistant to therapy given their expression of AR? And also want to ask with respect to ENTADFI, to the extent your market research may indicate. What potential peak revenue might we expect for that product? And given that you're selling that through the telemedicine channels, your own that you're setting up and others kind of give us a sense of what your margins maybe on that product? Thank you.

So the first question basically is trying to understand the patient population of AR positivity. So the way to look at it is that had made this comment before that men and women are born with the same machinery to make breast tissue. So why is it that women develop breast tissue, men do not? And the answer is the same machinery means there is an estrogen receptor and there is an androgen receptor. So in women, estrogen and novel androgens develop breast; in men, androgens and novel estrogen, you don't get breast. So it's a tremendous suppressive growth. So it's not surprising enough to 90% of breast cancer tissue will have an androgen receptor expression. And so now the question becomes, and the question you're asking is the enrichment part, in other words, greater than 40%, less than 40%. So when you look at the numbers, and this is based on our Phase II, so about 85% of breast cancers are going to be ER+. And of those 85% that are ER+, about half of those will be AR+ greater than 40%. And so it's still a huge market and pretty prevalent target that we can have an opportunity to hit. So 50% would be AR less than 40 and less than 50% would be AR+ greater than 40%, and that's the reason why we have sabizabulin trial as the sister trial because we know when we go out there and start looking for patients with metastatic AR+ breast cancer, that half of them – roughly half of them are going to be candidates for enobosarm. And so we've got another active agent in breast cancer, so why not allow that patient to have a choice of door number one and door number two. So door number one, if the androgen receptor is greater than 40% expression, you get to go on enobosarm. And if you're less than 40%, you get to go on sabizabulin. So we get two bites of the apple there. So both of them are huge markets. So the demographics are in our favor. Interestingly, we did see an independent presentation at the San Antonio Breast Cancer Meeting this past December that showed – and maybe this explains why the combination of CDK4/6 inhibitor with enobosarm could be interesting because it turns out that this is not static, it's pretty dynamic, meaning the androgen receptor expression can change and it can change with the actual treatment that you're getting. So what the San Antonio study show is that one – maybe one of the reasons why the combination of a CDK4/6 inhibitor enobosarm makes sense as it turns out that CDK4/6 inhibitor actually induces the upregulation or the expression of androgen receptor on breast cancer tissue. So another way of saying it is if enobosarm is trying to look for the androgen receptor and the CDK4/6 inhibitor makes more androgen receptor that may explain the potential synergy between the two. So it's not just what's there the 50-50, but it could be that there's a bigger population to go after because CDK4/6 inhibitor will take somebody out of the 40% range and put them higher, but that's for another day. As it relates to ENTADFI, we have not given guidance except to say that one, I mean, we think we're on some incredibly sure footing for a couple of reasons. Okay. One, there really hasn't been a new BPH drug in many, many years. And so we would be the first new BPH drug. And as you know, all the BPH products have some sort of sexual side effect and finasteride in particular, which is very, very popular, which shrinks the prostate. One of the number one side effects it has and one of the number one sexual side effects it has is ENTADFITM. And by combining finasteride with tadalafil, ENTADFI now becomes – it's not just a new BPH medicine, it is a – they call it new chemical entity in a sense that it's not substitutable. So you can't substitute it. It stands on its own, which means it's branded. So we have a branded product that could have a branded price will be viewed as branded by insurance companies, including Medicare. And so our pricing will be comparable to a branded product in the BPH space. And the fact that we don't have those sexual side effects of impotence in the combination compared to finasteride alone, really gives us an opportunity to convert established patients who are having problems, that's a low hanging fruit to us. Now to put this in perspective, the sales, I mean, the most recent data that I've seen, this is still about a $1 billion market with 45 million prescriptions. And if you can convert 1% or 2% of those patients into a branded price, you're already starting to hit numbers that are well above $200 million. And that's with 1% or 2% of the total market being converted to a branded product. So we think there's real upside here, but we have not given any guidance. We just believe it's a big market and we have a differentiated product that it's a branded price, and we're going to be taking advantage of telemedicine and not only telemedicine, but we're going to take advantage of GoodRx, incredible breadth of being able to go out there. And I mean, GoodRx spends about $300 million or $400 million a year, bringing people to their website, and it's not just consumers, it's also healthcare providers. And so to be able to drive awareness and to focus primarily digital – lack of a better term digital advertising to those patients that are most in need, so efficiently your resources gives a real optic and hit 1% or 2%, we can hit 3%, we can hit 4%, it feels doable. And so this could be a very important product to help us continue to drive the robust revenue that we're seeing from Urev and by putting ENTADFI with FC2, the two FDA-approved products just ensures that we can continue to maintain and largely paid for the clinical development of our products, and do that particularly in an environment where biotech looks like it's having a rough spell, but if you can look at our numbers and look at what we have in the bank, it looks like this model is working. And so we can adjust how we – what revenues come in, which is significant with our development program, it puts us in sure footing that our shareholders will see these multibillion dollar opportunity products without out seeing big dilution that typically happens in biotech companies are constantly raising money every six months to 12 months.

Great. Thank you.

The next question comes from Chris Howerton with Jefferies. Please go ahead.

Hi. Good morning and thanks for taking the questions. Really appreciate all the progress and the color this morning, Mitch. Maybe just two questions for me. One would be, could we get a little more color around the strategic decision to no longer pursue triple negative breast cancer with just competition in terms of like Trodelvy and other options make that less commercially viable at this point? Or I guess, what is some of the other thinking around pausing that program? And then the second one would be abemaciclib, could you just give us some thoughts around the market share and why that's the right partner for enobosarm and what that might mean for the commercial opportunity, let's say, second-line HER2+? Thanks.

Yes. Two very, very good questions. Okay. So let's start with the first one. The first one is purely a prioritization decision. So we still believe that triple negative breast cancer is a major market. If you look at Trodelvy, they developed a compound for patients with metastatic triple negative breast cancer that have failed two systemic chemotherapies. And that drug got bought by Gilead for $24 billion. So there's a market there, and we have two oral therapies enobosarm and sabizabulin, and we don't see the neutropenia and all the other stuff and the black box stuff that you see with Trodelvy. So we think there's a real opportunity, but we had to make a financial decision. And the financial decision was that, as I mentioned in the previous question answer is, I don't know what's happening out there in the biotech space. I think a lot of companies are going to be in trouble. They think the markets are wide open for them to raise money. So our thinking is we've got money in the bank, so that is a real reason why we need to be prudent with our resources and prioritize our resources because it's one thing to have no money in the bank and prioritize and nothing to have money in the bank and prioritize. And so if you look at our burn rate, “the cash we use”, it's small. Okay. Why is it small? Because we've offset it with revenue coming from our sexual health business. So in order to make sure until I see the things open up, then we've got a lot going on. We got three or four Phase III and we got a Phase IIb, and you've got the other ones that soon can be a Phase III. So we said, what, let's pause on the triple negative breast cancer program and that will put our spend on clinical development pretty much matching what we think will be coming in with our revenue in the Urev business, so that we can wake up with significant resources in the bank at the end of the year. And then – and if it looks like – it looks like we have more revenue coming in because of ENTADFI and then we can make further decisions to move another trial for it. So we're blessed and that we have new chemical entities that we own as a company that can – and we have promised. But I think no one will get mad at us for seeing through some of these Phase III programs because it will put us in a different market cap and also different financial setting so then we can move still other programs. So it's purely a prioritization play has nothing to do with the market. I think the market is huge opportunity, but we're dealing with a lot of huge opportunities and so we just have to prioritize. As it relates to your second question on abemaciclib, here's a very interesting point and why we thought really made sense as a partner. So it turns out that the CDK, when we first got involved with breast cancer, people kept saying, oh, the field is crowded, the field was crowded. You're not going to be able to differentiate yourself. And of course, that's not true because the androgen receptors were completely unexploited and we thought by coming in with the androgen receptors with enobosarm, the first drugable selective androgen receptor targeting an agonist that we had something that was new, but what changed the landscape was a CDK 4/6 inhibitors. For people on the call, CDK 4/6 inhibitors changed the landscape because it became the standard of care in first line breast cancer treatment if you are ER+, HER2-. And that's the largest population of breast cancer patients. And the company that owns that space right now is actually Pfizer because abemaciclib – excuse me, palbociclib in combination with an estrogen blocking agent is being used 80% of the time, which means the other 20% is being fought over by Novartis’ ribociclib and Lilly’s abemaciclib, okay. And unfortunately, the fortunate part is women will see between 24 and 30 months of progression-free survival, which is unbelievable, but they will all unfortunately progress. And when they progress, there's really nothing approved and nothing approved and nothing in the NCCN guidelines that follows a CDK4/6 inhibitor. So this phase is wide open. So it makes sense to go into second line with an agent that has shown in preclinical models that the combination of the enobosarm plus CDK4/6 inhibitor has synergy. And that synergy is probably related to the fact that the CDK4/6 inhibitors increasing the androgen receptor, making enobosarm work better. And so it's not just adding two drugs together to see enhancive effect, but it could really be a significant synergistic effect. And if that's the case, you need a CDK4/6 inhibitor. But what's a better situation to get a CDK4/6 inhibitor that is not being used in that 80% of patients in the first line. So that means if 80% of patients and first line using palbo, they need a new one, and so that new one could be abemaciclib. So we're really positioning enobosarm. I hope you grab that 80% of patients that fail palbo plus estrogen-blocking agent by now they're going to be looking for something else, that's something else will be abemaciclib and enobosarm. And so it was very strategic to partner with Lilly on this one because their agent, which is a very good agent and they came later to the game, could be in combination with enobosarm, the go-to combination after patients have failed first line.

That makes a lot of sense. And I really appreciate it. Thank you, Mitch.

Thank you.

The next question comes from Yi Chen with H.C. Wainwright. Please go ahead.

Thank you for taking my questions. My first question is, could you tell us whether the enrollment speed for the ARTEST study and the VERACITY study is meeting your expectation?

Yes. The answer to your first question, the ARTEST and VERACITY studies are on – both of them are enrolling on track.

Got it. Thanks. And could you tell us what you expect to occur on expectation for revenue from ENTADFI for this fiscal year?

Yes. So thank you for the question. So I answered to somebody else, I think Leland, also asked that same question. We are not giving guidance, as what we think that revenue will be. What we have said is a couple things, we said that there are 45 million prescriptions filled each year for BPH. We know that almost all BPH products are going to cause some sort of sexual dysfunction. We know that the finasteride products have impotence. We know the combination of finasteride and tadalafil, which is ENTADFI does not – we do not see the impotence. And so we think there's a real opportunity to convert these patients to the combination therapy ENTADFI. But we also said that the BPH market looks like it's about a billion dollars and about 2% to 3% of that's branded products, which make up about, $300 million or $400 million of that $1 billion. And so if we were able to convert 1% or 2% of that market towards ENTADFI, it could be big.

Okay. And regarding the triple negative breast cancer program, do you think there's a chance you might reactivate the program in the future and how soon make that happen?

Yes. So as it relates to commitment and reactivating it, the answer is absolutely we're committed to reactivating it. So it's purely a timing and prioritization of resources under the current market conditions and the fact that we have so many Phase IIIs going on, particularly COVID-19, that we felt that for an organization our size that we probably should pause on that, not spend that money and keep our money spent very close to our revenue or not just revenue, the cash coming off the sexual health business so that we can – we go another year with impressive money in the bank. And so that was thinking, but things can change. If COVID-19 hits and or if we find ourselves in a situation that ENTADFI and FC2 continue to generate 30% to 40% growth in [indiscernible] year-after-year because we're going into our six-year and we see something like that, then it'll be pretty easy. I mean, the protocols written, it's ready to go. We have the drugs it's ready to go. So we can pretty quickly get it back on track. But this is purely a prioritization resources to keep us – keep our spend within our cash coming off as much as possible off the cash, coming off the revenue based business.

Got it. And lastly, are there any parties that are interested in purchasing the UREV Sexual Health Division from the group?

So the answer is, are there any party's interested in purchasing it. So the answer is, yes, there are parties interested in purchasing it. The real question for us is making sure that it's the right value for our shareholders and to make sure that we take advantage of, I mean, right now it's generating a lot of money for us and it feels good to have that revenue base right now. We think there are things that we can do to make the Sexual Health Division look even more attractive so that we can, it's even more valuable. And that is right now going from a women's health company to a sexual health company, instead of having a single product. Now we have two products and instead of using other telemedicine partners, we're going to become a telemedicine entity ourselves. So all of those things will add more value to the base business. And while we're enjoying the cash flow coming from the base business at the same time, we're also increasing the value of the base business so that when we're ready, we'll have some more options to monetize.

Great. Thank you.

Next question comes from Kumar Raja with Brookline Capital Markets. Please go ahead.

Thanks for taking my questions and also congratulations on all the progress. First with regard to COVID-19 patients, what are you seeing there? Is it fair to estimate that you are close completion of enrollment given that you are planning to release data in the first half?

So make sure the question. It's a COVID-19 study and the question is say, it's my phone breaking in and out. So I apologize.

In terms of hospitalization, what kind of transfer [Technical Difficulty], yes, given that you are planning data on the first half, is it fair to expect that you are close to completion of enrollment?

I see what you're saying. Yes. So the good news is that we're on track, as I said, in my, my formal comments, we're on track to have data, clinical trial results for this study in the first half of this year. I will tell you that the hospitalizations have increased tremendously across the world, unfortunately for the patients because we don't – of course, we don't want to see that, but that's, what's happening. As you know hospitalizations and death, lack behind new cases. And what's interesting is what we're seeing is that the cases that make it to the hospital and those ICU type patients, once they're on that slippery slope, you're finding the death rates in patients that are at risk, especially those with at risk of acute respiratory distress syndrome is similar to the other variants. It's just at the milder stuff, we see a lot of it, but the ones that finally make it to the hospital was a problem. As you know there was about 140,000 new hospitalizations a week. And so it's a – I mean, it's the highest ever in the pandemic. It's higher than all the other three waves. So with that said, it's put us in solid footing to enroll and to get the data in the first half of the year. So all I'm going to tell you is that, we believe that we will have clinical data in the first half of the year to in patients who are hospitalized, which as you know, now there's no medicine available and the Fast Track status from the FDA, it's further confirmation that's an unmet medical need. And if we can fill that unmet medical need with an oral agent, that's not a infusion that doesn't require cold storage, so that you can put it in backpacks and get it to the remote airings of the world, it's hospital based as opposed to pharmacy based. So that you can quickly get it mobilized into hospitals as opposed to trying to get it to every pharmacy in the country. So from a distribution standpoint, it would be a lot easier. So I think we're kind of in the right space, right time, but we're on track to provide data in the first half of this year.

Okay. And with regard to enobosarm and sabizabulin, what kind of interactions have you had with EMA and kind of the ongoing trials be leveraged for approval in…

So as it relates to the EMA, we have – all our interactions have been with FDA, our interaction with EMA for the international studies next year we file the appropriate paperworks that we can do the studies in Europe, which we have. But we have not gone to EMA to seek scientific advice lending in that sort mainly because our studies are pretty straightforward, but we will – as we get the enrollment going and we go back to EMA and go back to Japan. But at this point now, our thinking is focus in the U.S. and when we partner the opportunity, the partner will have with wherewithal and the ability to do Japan and Europe at the same time. But we're successful in the U.S., which is the premium market will be in good shape.

Okay. Finally, with regard to COVID-19 external funding, is the funding mostly for manufacturing?

Yes. And so as you know, we're essentially almost done with the clinical study, where we're going to need the most help, and it's going to be in procurement and distribution. I can't remember the number, but it was a big number, a billion or something, and Pfizer got a billion or something for procurement. So there's no risk to the government, once you get an EUA Emergency Use Authorization, then the issue becomes – the government needs to buy and get it out there. And so we are successful in our Phase III and we have in EUA, we feel pretty strongly and we believe that we should be able to get external funding to help us with scale up and distribution. And so that's been our focus. Interestingly, after the wave of vaccines and antibody drugs, BARDA has just gone silent in terms of funding these opportunities. But they're very, very active once you've shown efficacy and safety. And so we're going to take advantage of that window.

Thanks so much.

Thank you.

Ladies and gentlemen, this concludes our question-and-answer session. I would now like to turn the conference back over to Dr. Mitchell Steiner for any closing remarks.

Thank you, everybody. I appreciate you joining us on today's call and I look forward to updating all of you in our progress in our next investors call. Thank you again.

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